What Is a Crash in Colorado Springs?

Someone asked me a good question recently: "What is a crash here in Colorado Springs?" It is worth answering carefully, because the word gets used constantly and defined almost never. When you look at what has actually happened here over 30 years, the honest answer surprises most people.

The picture everyone has is borrowed from the stock market

When people say "crash," they picture a price cliff: a number that falls a lot, fast. That is a fine mental model for a stock, which trades every second, has no lock-in, and can be sold instantly. A house is none of those things. Applying the stock-market definition to housing is where the fear usually goes wrong, so let us start with what the local price record actually shows.

In 30 years, the price has fallen exactly once

From 1996 to today, the Colorado Springs median sale price went from about $112,000 to roughly $463,000. In that entire stretch it declined one time: from a pre-crisis peak near $206,000 to a low of about $182,000 in 2011. That is a drop of about 12%, it played out gradually over roughly five years, and it had fully recovered by 2013.

Sit with that. The one and only price decline in three decades happened during the worst national housing collapse in a century, the event that leveled markets like Phoenix and Las Vegas by 40% or more, and here it was a soft 12% that healed in two years. By the stock-market definition of a crash, Colorado Springs has never had one. Not in 2008, and not in the recent cooling, when prices went essentially flat (about $455,000 in 2022 to $463,000 now) rather than falling.

How we measure it, and why a 10% monthly swing is not a crash

Fair objection: pull up a monthly price chart and you will see the line jump 10%, and it looks like something crashed. It did not. That chart is measuring the wrong thing. A monthly median or average price does not tell you what homes are worth. It tells you which homes happened to sell that month.

Only about 1,060 homes close here in a typical month. When a few more high-end homes sell, the median and average jump; when more starter homes sell, they fall. Add seasonality, since spring sells bigger and pricier homes than winter, and that small sample, and the monthly line wobbles in a band without any single home changing value. In our own data over the last three years, the monthly median moved 2.2% in an average month, as much as 6.5% in a big one, and its full peak-to-trough range was about 10%. That 10% is exactly what people are pointing at.

Now watch what the same data does once you remove the noise. Across those same three years, the 12-month-average median went from about $461,000 to $460,000. That is negative 0.3%. The monthly line spanned 10% while the real trend moved essentially zero, and every dip was followed by a bounce within a month or two. A crash does not bounce back in 30 days. Noise reverts; a crash trends.

So here is our methodology, and it is deliberately conservative:

• We measure the trend with annual medians, which average away seasonality, sales mix, and small-sample noise. That is what the 30-year chart above uses, and it is why it shows one real decline, not thirty.
• We treat the average price as the noisiest number and lean on the median, because a handful of luxury sales can drag an average around by design. On the monthly chart the average swings even harder than the median for exactly that reason.
• We are honest that a median is a mix measure, not a repeat-sales measure. The gold standard for whether the same house lost value is a repeat-sales index like Case-Shiller or the FHFA House Price Index. At the trend level our annual medians track those closely, and all of them tell the same local story: one shallow, temporary decline in 30 years.
• A crash requires a sustained decline in the smoothed measure, alongside forced selling and frozen credit. A single noisy month does not qualify, no matter how large the number looks.

So what actually crashed in 2008?

Something clearly broke in 2008. It just did not break the price. Two other things did the breaking:

• Sales volume. Closings fell from about 13,700 in 2006 to around 9,200 through 2009 to 2011, a drop of roughly one third. The market did not get cheaper. It got frozen.
• Credit. The financing mix flipped hard. Conventional loans fell from 71% of closings to 30% as private credit dried up, while government-backed VA and FHA loans roughly tripled their combined share to about half the market. The loans that kept closing were the ones the government stood behind.

That is the real shape of a downturn here: a collapse in the number of transactions and a freeze in credit, with price as a minor, lagging afterthought. Our sales velocity data shows this pattern repeat in every soft patch. When it gets hard to buy here, the market does not slash prices. It simply stops moving.

A crash you cannot see on the price chart

There is a subtler point too. A market can correct without the price ever falling. Since 2022, the nominal median has been flat, but the payment on that same home rose sharply as rates climbed, and inflation ate away at the dollars underneath. In real, affordability-adjusted terms, buyers have already absorbed a meaningful correction. It just never showed up as a red line on the price chart, because the thing that hides it, sub-4% locked-in owners who will not sell, keeps homes off the market and prices sticky.

So, what is a crash in Colorado Springs?

Here is the honest definition, built on the local record: a crash here is not a price event. It is a liquidity and credit event marked by forced sellers, frozen lending, and a collapse in transactions. The price decline, if it comes at all, is small and slow, because three things hold prices up in this town:

• Rate lock-in. Most owners hold mortgages far below today's rates and simply will not sell, which keeps supply thin.
• The VA and FHA floor. This is a military market. Government-backed lending is the last credit to freeze, so there are almost always enough qualified buyers to put a floor under prices.
• No forced sellers, absent job loss. People sell homes at a loss when they have to, not when they want to. Without a wave of local unemployment, the forced-seller pressure that actually drives prices down never builds.

The bottom line

When someone asks whether Colorado Springs is going to crash, they are almost always watching the wrong number. A 20% price drop is not what history says to expect here. What history says is that a downturn shows up as a freeze: fewer sales, longer days on market, more negotiation, and a shift toward VA, FHA, and cash. The real question is never "will prices fall." It is "will jobs and credit hold." Watch the employment picture and the lending market. Those are the things that would actually turn a Colorado Springs slowdown into something worse, and in 30 years, they never quite have.

Methodology: median sale prices, volume, and financing mix are from Pikes Peak MLS closed sales (pre-2006 prices from monthly market metrics). Figures are nominal unless noted. This is market analysis, not a forecast. Analysis by Rob Thompson, Realtor, Iconic Colorado Properties.